Real estate Mogull

Two years ago, Marc Mogull made waves in the European private equity real estate industry when he announced his departure from Doughty Hanson, where he had founded the UK private equity firm’s real estate arm. These days, Mogull is looking to make waves of a different sort, by implementing his middle market investment strategy with a firm of his own.

As founder and managing partner of Benson Elliot, a London-based private equity real estate firm, Mogull is currently raising a €350 million fund, Benson Elliot Real Estate Partners II. Though the pan-European vehicle has already held a first close on €264 million, sources close to the firm note that investor demand has exceeded €1 billion.

Mogull: fundamentals first

No doubt investors were attracted to Mogull’s longevity in the European property markets, his track record at Doughty Hanson and his granular approach to real estate investment. As he puts it, “I’ve always taken a bottom-up approach to this business. I’m not big on broad, sweeping strategies.”

Nevertheless, Benson Elliot’s strategy does call for deals of a particular size, up to €200 to €250 million, where Mogull has spent much of his career. “That is a space I’ve always felt comfortable with,” he says. “Deals driven more by fundamentals than by financing.”

To help him source and executive those deals, Mogull recently hired Trish Geery, former managing director and head of global real estate for the Dubai Investment Group. Geery, who also spent ten years with Goldman Sachs, much of it in Europe, will be a partner at the firm. According to Mogull, Benson Elliot, which currently has seven professionals including Geery, will have at least ten by the end of the year.

I’ve always taken a bottom-up approach to this business. I’m not big on broad, sweeping strategies. Marc Mogull, founder, Benson-Elliot

By the time Benson Elliot finishes raising its fund, which is expected shortly, it will be one of just a handful of independent pan-European private equity real estate funds. Mogull, however, takes a different viewpoint, one that not only reflects his newfound independence, but also neatly summarizes his investment philosophy.

“I don’t view myself as being in the opportunity fund game,” he says, adding that his firm’s approach, while focusing on hard asset investing, is much more akin to a hedge fund than an opportunity fund. “Our investors understand that one of the most important things we should be doing for them is to assess and price risk. That’s inconsistent with the prevailing model of a single return hurdle (typically 20 percent) and one size fits all capital. We’ve got the flexibility to look at deals with a broader range of risk profiles and, consequently, a broader range of forecast returns. I don’t feel as constrained as under the old model.”